Technically this post is about estate planning, but it has much to do with family law since it is generally family that is involved in the care of disabled family members. A Kentucky Revised Statute that came into effect on July 12th, 2012 opened up some options for protecting the assets of disabled person. KRS Sect. 387.865 makes it easier to create a special needs trust.
When someone has become substantially disabled they may qualify for two different sorts of government benefits. One sort of benefit is based solely on the condition of the prospective recipient. Social Security Disability Insurance (SSDI) fits in this category because you can receive it if disabled even though you may have substantial assets. The other sorts of benefits are “means tested” programs. In other words, you have to not only have the condition but also lack the means to provide for yourself. Long term care paid for by Medicare is this sort of benefit because excess assets are expected to be utilized to pay for care instead of Medicare.
A special needs trust is one ordered into being by a District Court Judge, usually one in the Probate Division. The petitioner pursuing creation of the trust has specifically mandated pleadings to make and proposes the language of the trust. Once the court orders it into being, the special needs trust protects assets, such as monetary awards from lawsuits or settlements over a negligent injury, from going immediately to pay for things that Medicare could cover. A provision in the trust allows for those assets to be used only for supplemental care costs over and above what Medicare would pay.
This is not a vehicle to pass assets on to heirs because the statute requires that any assets left over after the disabled person is deceased be reimbursed to the state. However, it can definitely soften the financially blow to family of the disable person and prevent them from exhausting their own resources.